California is already home to some of the highest taxes in the country, and another tax increase may be on the ballot this year: the “billionaire tax.”
This naked money grab is a one-time, 5% tax on anyone’s wealth over $1 billion—and people are literally leaving over it.
California is already losing about one taxpayer per minute, and this lunatic proposal is gasoline on the fire.
Because it would be retroactive to January 1 of this year, the billionaire flight began in earnest before the new year, as wealthy Californians fled the state for less onerous jurisdictions.
According to Chamath Palihapitiya, cohost of the “All-In” podcast and venture capitalist, so many billionaires preemptively fled California in December that they took a whopping $1 trillion of assets with them, drastically shrinking the tax base and reducing future revenues in the not-so-Golden State.
Among the economic refugees is Google cofounder Larry Page who summarily left the state and took whatever assets he could with him to avoid the onerous proposed tax.
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This flight will be devastating for California’s bottom line. The top 1% of earners already paid about half of all state income taxes, but now there are fewer of them, which will depress state tax revenue.
If California makes the boneheaded decision to go through with this tax, the hemorrhaging will only become worse, especially among the wealthiest state residents.
The middle class would be the hardest hit, ironically, and not the billionaires themselves.
As F. Scott Fitzgerald once wrote, “the very rich are different from you and me.” They have ways—perfectly legal—of shielding income from taxes.
Most middle-class families in California don’t have that option, and many lack the resources to make a cross-country move to Florida.
They’re stuck in this “Hotel California”—they can check out anytime they like, but they can never leave.
Once the state is done taking the wealth of billionaires, it will turn to middle-class families. They ultimately get squeezed by an overgrown government hungry for revenue.
This tax, like any wealth tax, would also suffer from other huge problems. It would involve taxing unrealized gains—the theoretical increases in value of assets since they were bought.
Because everything is worth what its purchaser will pay for it, you don’t truly know the value of something until it’s sold. That’s especially true when considering highly volatile assets, like equities, whose values literally change second-by-second, let alone day-by-day.
The idea that government would arbitrarily choose when to evaluate your assets, and then tax you on a value that may or may not be there, displays not only the height of arrogance, but a dearth of economic literacy.
Consequently, the wealthy in California who haven’t already fled are fighting tooth-and-nail to smother this nascent monster before it’s fully-grown. The extent of their efforts also reveals just how much they would lose if the tax came to fruition. For example, Peter Thiel has already given $3 million to defeating the measure.
Wealthy individuals from across the political spectrum seem to be in near-universal agreement that this is a terrible, awful, no good, very bad idea. People like Chris Larsen, Palmer Luckey, and David Sacks have been vocal opponents.
Even Democratic politicians are panning the proposed money grab, including Governor Gavin Newsom. He said the tax “makes no sense,” and he’s exactly right—for once.
Likewise, the Democrat mayor of San Jose, Mathew Mahon, said such a tax would “sink California’s innovation economy.”
You know a tax is particularly bad when it loses the support of even the most rabid fans of the tax-and-spend agenda.
With any luck, the proposal will fail and avoid further damage to California’s economy. Unfortunately, though, the damage has already been done, with so many wealthy people having left for Texas, Florida, Tennessee, and other no-income-tax states before the start of 2026.
Furthermore, decades of tax increases and profligate government spending have already eroded California’s economy and population, with over 200,000 people on net moving to other states each year.
That demographic slump even caused California to lose a seat in Congress during the last Census.
Of course, if the billionaire tax passes, California will lose more people, more Congressional seats, more innovators, more billionaires, and more tax revenue.
In sum, California will just plain lose.
This piece originally appeared in the New York Post
